Segment Disclosure Quantity and Quality under IFRS 8: Determinants and the Effect on Financial Analysts’ Earnings Forecast Errors

CFA Digest ◽  
2017 ◽  
Vol 47 (4) ◽  
Author(s):  
Sadaf Aliuddin
Keyword(s):  
Financial Analysts ◽  
Earnings Forecast ◽  
Forecast Errors ◽  
Ifrs 8 ◽  
Segment Disclosure

scholarly journals Segment Reporting Level And Analyst Forecast Accuracy

2018 ◽  
Vol 34 (3) ◽  
pp. 471-486
Author(s):  
Kyongsun Heo ◽  
Seoyoung Doo
Keyword(s):  
Financial Reporting ◽  
Financial Analysts ◽  
Forecast Accuracy ◽  
Financial Statements ◽  
Earnings Forecast ◽  
Consolidated Financial Statements ◽  
Operating Income ◽  
Segment Disclosure ◽  
Types Of Information ◽  
Segment Information

In a setting where the primary financial statements have been converted from individual financial statements to consolidated financial statements in Korea, we examine the effect of segment information disclosed by the firm on analysts’ consolidated-base earnings forecast accuracy. Since Korean firms have prepared the primary financial statements on a non-consolidated basis in the pre-IFRS regime, the adoption of International Financial Reporting Standards (IFRS) leads to a great deal of difficulties and complexities in making accurate consolidated forecasts for users of financial statements, even for financial analysts who are sophisticated users of financial statements. In this situation, we conjecture that the amount of details and types of information in segment disclosure will influence analysts’ forecast accuracy. Consistent with the prediction, we find that financial analysts are able to make more accurate earnings projections when firms provide more disaggregated accounting figures by each segment. Moreover, we find that analysts can make forecasts more accurately when firms disclose more persistent earnings component (i.e., segment operating income). Furthermore, we find that the effect of the segment disclosure levels on analysts’ forecast accuracy is more pronounced for firms with multi-segments. Our results indicate that disaggregated segment information is a useful source for financial analysts to have better understanding about complete picture of firms’ consolidated earnings and improve their forecasting performance.

Refining financial analysts’ forecasts by predicting earnings forecast errors

2017 ◽  
Vol 25 (2) ◽  
pp. 256-272 ◽  
Author(s):  
Tatiana Fedyk
Keyword(s):  
Serial Correlation ◽  
Design Methodology ◽  
Financial Analysts ◽  
Earnings Forecasts ◽  
Autoregressive Process ◽  
Earnings Forecast ◽  
Forecast Errors ◽  
Content Type ◽  
Quarterly Earnings ◽  
Prior Literature

Purpose The purpose of this paper is to examine the way serial correlation in quarterly earnings forecast errors varies with firm and analyst attributes such as the firm’s industry and the analyst’s experience and brokerage house affiliation. Prior research on financial analysts’ quarterly earnings forecasts has documented serial correlation in forecast errors. Design/methodology/approach Finding that serial correlation in forecast errors is significant and seemingly independent of firm and analyst attributes, the consensus forecast errors are modeled as an autoregressive process. The model of forecast errors that best fits the data is AR(1), and the obtained autoregressive coefficients are used to predict consensus forecast errors. Findings Modeling the consensus forecast errors as an autoregressive process, the present study predicts future consensus forecast errors and proposes a series of refinements to the consensus. Originality/value These refinements were not presented in prior literature and can be useful to financial analysts and investors.

The Association between Unsystematic Security Returns and the Magnitude of Earnings Forecast Errors

1979 ◽  
Vol 17 (2) ◽  
pp. 316 ◽  
Author(s):  
William H. Beaver ◽  
Roger Clarke ◽  
William F. Wright
Keyword(s):  
Earnings Forecast ◽  
Forecast Errors ◽  
Security Returns

scholarly journals Pengungkapan Kuantitatif dan Kualitatif Segmen Operasi Berdasarkan PSAK 5 Revisi 2009 (Penyesuaian 2015) di Indonesia

2021 ◽  
Vol 4 (2) ◽  
pp. 175-191
Author(s):  
Dewi Diah Fakhriyyah ◽  
Irma Hidayati
Keyword(s):  
Quantitative Information ◽  
Governance Mechanism ◽  
Public Companies ◽  
Customer Information ◽  
Compliance Level ◽  
Ifrs 8 ◽  
Segment Disclosure ◽  
The Board Of Directors ◽  
Medium Level ◽  
Corporate Governance Mechanism

Reporting of operating segments has become an important concern, therefore there is a PSAK 5 regulation which is continuously updated based on IFRS 8 to improve operating segment reporting. This study aims to examine the application of operating segment disclosure and its determinants in public companies in Indonesia.This research method is quantitative method. The operating segment in the financial statements of the LQ 45 Index’s Company in 2016 is analyzed by scoring to the items required by PSAK 5 Revised 2009 (Amandement 2015). The results showed that the majority cozmpany's compliance level of quantitative information is medium level of compliance,. Quantitative disclosure shows the most reported items are profit loss and total assets, meanwhile the least reported item is other non current assets and main customer information . Meanwhile, the most reported item of qualitative disclosure is the main products and services which generate revenues for the operating segments. This study shows that companies disclose more quantitative information than qualitative. In addition, the good corporate governance mechanism that determines the extent of disclosure of operating segments is institutional ownership and the board of directors. This research has implications for operating segment regulators to do better and contribute to the agency theory and signaling theory.

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